Public Bill Committee

[Mr. Roger Gale in the Chair]
H&R 11 Local Government Association and Chartered Institute of Housing
H&R 12 UNISON

Clause 260

Family intervention tenancies: general

Andrew George: I beg to move amendment No. 103, in clause 260, page 105, line 14, at end insert ‘, and
(c) under a specific Family Intervention Project or other similar scheme approved by the HCA.
(3A) The HCA may by order designate projects or schemes which it shall approve for the purposes of subsection (3)(c).’.

Roger Gale: With this it will be convenient to discuss amendment No. 104, in clause 260, page 106, line 32, at end insert ‘, and
(c) under a specific Family Intervention Project or other similar scheme approved by the HCA.
(3A) The HCA may by order designate projects or schemes which it shall approve for the purposes of subsection (3)(c).’.

Andrew George: Good morning, Mr. Gale. It is a pleasure to introduce amendments Nos. 103 and 104, which aim to restrict the use of family intervention tenancies to circumstances in which a recognised family intervention project approved by the Secretary of State or Welsh Ministers provides behaviour support services. Without the amendments, the general reference to behaviour support services in subsection (3)(b) may enable landlords to use such highly insecure tenancies to claim that they are providing intensive support services, when the nature and quality of those services are not subject to scrutiny. Two separate but identical amendments are necessary because the clause contains separate provisions for secure council tenancies and assured housing association or private tenancies.
I hope that the Minister accepts that the purpose behind the amendments is to ensure that action is taken in a proper and measured way. Given the pressure on time, I will not elaborate unnecessarily and I look forward to the Minister’s response.

Iain Wright: Good morning to you, Mr. Gale, and to the rest of the Committee. May I say what a pleasure it is to see you back in the Chair.
We now come to amendment No. 103. To be honest, I did not think that we would get this far, but we have. For the reasons suggested by the hon. Member for St. Ives, I shall take the two amendments together. As he said, they are identical and apply to two separate provisions in the clause.
The amendments would have significant implications for the delivery of the family intervention programme. Although the Department for Children, Schools and Families and its partners have developed close working relationships with projects that receive Government funding, that relationship does not involve formal designation or accreditation. We would therefore need to consider in some detail how any formal accreditation would work and to assess the burdens that it would place on projects. We would not wish to impose rigid criteria on projects if that served to shackle their innovation or restrict their flexibility in tailoring individual services to the specific needs of individual families. For example, it is unclear whether the amendments propose that projects should be subject to performance management or inspection as a condition of any designation.
I am aware that there are concerns about the possible misuse of family intervention tenancies, but I strongly believe that such concerns are unfounded, and I have a FIT in my constituency. Family intervention projects continue to prove how successful they are at tackling the root causes of antisocial behaviour. Over time, similar approaches may come into existence to provide equally effective behavioural support to antisocial families, but such approaches may not necessarily be classed as family intervention projects or receive direct Government funding, and we do not want them to be unable to include family intervention tenancies. To that end, we have specified in the Bill that family intervention tenancies can be used only in the context of behaviour support services, by which we mean that they must address antisocial behaviour. That sets the necessary parameters for the use of such tenancies without creating undue restrictions.
In moving the amendment, the hon. Gentleman said—I think that I am quoting him correctly, but he can always intervene if I have got this wrong—that these insecure tenancies cause a burden in terms of any landlord. That is a crucial point, which I want to address on the record. It is very important to note that family intervention tenancies can be used only by social landlords, such as local authorities and registered social landlords, because FITs will be applicable only to those tenants who have a secure or an assured tenancy. As we are aware and as we will debate when we consider part 2 of the Bill, both types of landlord are subject to regulation. Because of that crucial point, I do not think that we need to consider the new layer of regulation that the amendments would impose. I hope, therefore, that my explanation has allayed the concerns that the hon. Gentleman has about the misuse of family intervention tenancies.

Andrew George: I am grateful. I was seeking for my language to apply to a wider range of landlords in circumstances where the FIT measure might be applied. It is reassuring that the Minister is saying that it would be used only in very narrow circumstances. However, I hope that the Minister appreciates that there are organisations outside this House that are concerned that FITs could be used to tip the balance against the interests of families who, in many circumstances, the state is trying to help.

Iain Wright: That last point is crucial. The state is trying to help those families. An awful lot of resources are devoted to targeted and focused help for antisocial families. FITs are voluntary and we may come on to that issue in the clause stand part debate. I recognise the sentiment in which the hon. Gentleman moved the amendment. However, the key point is that we have defined it narrowly to avoid the risk that he has identified. We are trying to balance that with the need for flexibility and innovation to ensure that the resources used and the approaches taken to address the needs of antisocial families are as targeted as possible. I hope that that reassures him.

Andrew George: I wish to probe the Minister further. This is a short debate, but I simply want reassurance from him in respect of circumstances that I am sure he can envisage—certainly I can in my constituency—in which neighbours have created the circumstances in which a family have become subject to a FIT. In such circumstances it is the others who have been victimising them and who should be the focus of these actions. The family could be the victims rather than the perpetrators.

Iain Wright: I thank the hon. Gentleman for that clarification. I recognise the example that he raises from my own constituency case load. However, I must point out that FIPs and FITs are entirely voluntary. Families are accepted into these support programmes only after an extraordinarily rigorous process of evaluation to ensure that they are likely to benefit from it, to weed out that sort of victimisation—for want of a better term—and to tailor support to the family’s needs. That is in everybody’s interests. As the hon. Gentleman will appreciate, and as I tried to make clear earlier on, that takes considerable time and resources.
Projects are established to ensure that long-term changes in behaviour are made and that families do not give up at the first hurdle. We do not want to facilitate fast-track evictions for so-called problem families. Any eviction from a project would be seen as a failure by the agencies concerned. The latest evidence suggests that very few families are dropping out of support programmes. We must bear in mind the voluntary nature of these measures and that families want to engage in this sort of support programme to get help in addressing their behavioural issues. The FIT is devised as a temporary tenancy to help that long-term stability. On that basis, I hope that the hon. Gentleman will withdraw the amendment.

Andrew George: I am grateful to the Minister for that clarification and for the reassurance on the circumstances in which FITs and FIPs will be applied. Having received those reassurances on the parameters within which they operate, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Roger Gale: Just before we proceed, I have been looking, as no doubt hon. Members have been looking, at the schedule before us for consideration and completion by Thursday 31 January. I think that we need to concentrate a few minds.
I am willing, subject to the staffing of the Committee, to sit, if necessary, this evening and I am also willing to sit next Tuesday evening. I say that now because the usual channels may want to consider this proposal fairly carefully. As Members of the House, we have a duty to the staff of the House to give them adequate notice if we intend to sit longer than the allocated hours. We do not need to change the programme resolution to do that, because we would simply extend the afternoon sitting. That would entail a break, say, from 7 o’clock until 8 o’clock, because I do not think it is reasonable to expect people staffing a Committee, either civil servants or indeed the Chairman, to sit for more than three hours without some type of a break, for fairly obvious reasons. However, we could sit from 8 o’clock until 10 o’clock and we could sit from 8 o’clock until 10 o’clock next Tuesday. You might like to consider that as a Committee.
I would be grateful if the usual channels could let me know by the end of the morning, so that I can let the staff know if you are thinking of sitting later this evening; next Tuesday is a bit of a moveable feast. I am giving that advance notice now, simply because hon. Members, should they take that decision, might wish to look at their own diaries.

Iain Wright: I beg to move Government amendment No. 115, in clause 260, page 105, line 37, leave out ‘Such regulations’ and insert—
‘A notice under sub-paragraph (5) must contain advice to the new tenant as to how the new tenant may be able to obtain assistance in relation to the notice.
( ) The appropriate national authority may by regulations made by statutory instrument make provision about the type of advice to be provided in such notices.
( ) Regulations under this paragraph’.

Roger Gale: With this, it will be convenient to discuss Government amendment No. 116.

Iain Wright: Thank you, Mr. Gale. I thank you for that ruling as well, which I think is most wise. I also thank you for the consideration of the House staff. I would suggest, Mr. Gale, that you could possibly take on a role as a trade union shop steward; I think that you would perhaps be very good at that.

Roger Gale: Order. What makes you think that I have not been one, Mr. Wright?

Iain Wright: I will move swiftly on, Mr. Gale.
The purpose of these amendments is to ensure that the notice issued to families before they decide on a voluntary basis, as we have just been discussing, whether or not to sign up to a family intervention project and family intervention tenancy contains advice as to how families may obtain assistance in relation to the notice. That will involve directing families to take independent advice before they reach a decision.
I want to stress—I have done this on a number of occasions this morning, but I think that it is crucial—that families sign up to FITs on a voluntary basis. Therefore, it is important, if not vital, that, where they do so, it is as a result of an informed decision to accept both the support programme on offer and the insecure tenancy offered in relation to that support.
Although we have every confidence that landlords and projects will ensure that families are made fully aware of the decision that they are being asked to make and its potential consequences, to make it incumbent on landlords to advise families to seek independent advice about the content of the notice with which they have been issued will further assist families in working through their decision.
These amendments therefore provide for the Secretary of State to make regulations specifying the type of advice that must be provided in the notice. I hope that hon. Members will accept them.

Amendment agreed to.

Amendment made: No. 116, in clause 260, page 107, line 9, leave out ‘Such regulations’ and insert—
‘A notice under sub-paragraph (5) must contain advice to the new tenant as to how the new tenant may be able to obtain assistance in relation to the notice.
( ) The appropriate national authority may by regulations made by statutory instrument make provision about the type of advice to be provided in such notices.
( ) Regulations under this paragraph’.—[Mr. Wright.]

Clause 260, as amended, ordered to stand part of the Bill.

Clause 261 -  Certain family intervention tenancies: termination

Lembit Öpik: I beg to move amendment No. 105, in clause 261, page 108, line 2, at end insert—
‘(1A) In an action for possession of a family intervention tenancy, the court shall have power to—
(a) postpone the date for possession; or
(b) stay or suspend execution of the order
on such terms as it thinks fit.
(1B) The court shall not have the power referred to in subsection (1A) where the notice in subsection (1) was served on the basis that the tenant or a member of his household has been guilty of conduct causing or likely to cause a nuisance or annoyance to a person residing, visiting or otherwise engaging in a lawful activity in the locality.’.
What concerns us is that the legislation, as it is currently drafted, means that the 28-day notice period for a FIT can be issued for any reason and not solely one linked to antisocial behaviour, for example due to rent arrears caused by housing benefit delays, and so forth.
The test as to what behaviour would merit possession, or—to be more frank about it and use common parlance—eviction is, in our view, simply not robust enough. That is what the amendment attempts to correct. The purpose is to allow the court to retain its discretion, which it has in the case of a secure or assured tenancy, to dismiss a claim for possession, or to grant a suspended possession, where the reason for the landlord’s action is not antisocial behaviour, but something else, such as rent arrears. The amendment would ensure that fast-track eviction proceedings available for family intervention tenancies could be used for antisocial behaviour reasons only.
The process for family intervention projects and tenancies has been laid out by the Government, which hopefully we all understand. However, under the Bill, if the landlord decides to continue with proceedings for possession after following the process for family intervention tenancies, the county court cannot examine the reasons for doing so. We are concerned about the inflexibility there, and the lack of discretion to refuse an order raises alarm bells for us. We seek the Minister’s perspective on that, because we cannot believe that it is right, nor the Government’s intention, to create a process so inflexible that it could be a breach of natural justice for the tenant. Although landlords could use the provision in many ways, it goes against the spirit of what I think the Government are trying to do with this legislation. Shelter feels the same, and on its behalf I ask the Minister to share his perspective and to take on board what I think is a fairly common-sense modification to this part of the Bill.

Iain Wright: I disagree with the amendment, although I appreciate the manner in which the hon. Gentleman moved it. If we accepted the amendment, it would allow the courts to postpone, stay or suspend an order for possession granted in respect of a common law tenancy. As I think that he said, currently that is not the case. A court must award possession if it is satisfied that due process has been followed, and set the date on which the landlord can gain possession of the property.
If, for instance, a family wilfully refuse to pay rent for the family intervention project accommodation that they are occupying, having voluntarily agreed to do so, the amendment would mean that the courts had the power to decide whether, and on what terms, the tenant might remain in the property. That would create a situation similar to that of secure or assured tenancies. I believe strongly that that would seriously undermine our proposal that family intervention tenancies should be common law tenancies. We want to provide landlords with greater flexibility in arranging tenancies for families who have voluntarily accepted support and who are housed in specialist accommodation.
Family intervention projects have been proven to deliver notable successes in helping families address the root causes of antisocial behaviour. To give courts the discretion proposed by this amendment would threaten the use of family intervention tenancies as an effective tool in encouraging families to comply with the terms of their support contract. In other words, in voluntarily accepting a family intervention tenancy, they should be aware of the consequences of their actions. If they subsequently refuse to meet the conditions of the tenancy, the landlord may move to evict swiftly.
I understand what the hon. Member for Montgomeryshire said, however, and his concerns about clause 261. We are mindful already of the need to guard against the misuse of family intervention tenancies and have provided safeguards in this clause, including a right to a review of the reason why eviction is being sought under a local authority family intervention tenancy. In addition to that review procedure, it is possible, if the tenant deems it necessary, to apply for judicial review of the reason for a decision to evict.
If one accepts the premise, which I do not, that the courts should be given discretion where possession under a family intervention tenancy is sought, I question the validity of removing that discretion solely where possession is sought on antisocial behaviour grounds. I think that the hon. Gentleman made that point himself, so in some respects I am making his argument for him, which was not my intention. However, it would mean that courts would have discretion over matters such as rent arrears, with which it is relatively easy to demonstrate matters of fact, but not in cases of antisocial behaviour, in which issues are often much more complex and open to subjectivity. On that basis, I disagree with the amendment. I think that we have covered this matter adequately in the Bill, and I hope that the hon. Gentleman will withdraw his amendment.

Lembit Öpik: Well, Mr. Gale, the Minister makes the case for the amendment, and then asks me to withdraw it. In fairness to the Government, they have shown active recognition of the link between antisocial behaviour and the social needs of perpetrators—we all agree on that. Also, Shelter has done some research to back up the effectiveness of taking a support approach, so there is no disagreement there. In terms of enforcement, communities need protection, and it is appropriate for housing providers to use measures available to them to enforce the responsibilities laid out in tenancy agreements. However, the Minister’s argument goes wrong on its non-acceptance that this approach balances the legislation against the tenant and in favour of the landlord. The FIPs are voluntary, as he says, but surely this is a significant disincentive to families taking part in the project, not least because it seems to make their tenancies less secure.

Iain Wright: Is not that precisely the point? The voluntary nature—I remind the hon. Gentleman of our discussions on previous amendments—helps to strengthen the information provided to families, so that they are fully aware of the consequences. Families have to enter the process voluntarily.

Lembit Öpik: That involves an assumption that every family will have a full and confident grasp of the legislation and terms of the tenancy, but such families often are not good advocates for their own best interests. In some senses, that is why they have difficulties in the first place. The Minister is ignoring the reality that various families will not be able to digest and interpret the legislation in their interests and are therefore susceptible to being victimised by its effective use by others. The notice to quit on a family intervention tenancy can be issued for any reason, not solely for antisocial behaviour. That is wrong.
The test as to what behaviour would merit possession is not robust enough. Landlords often feel that possession is merited, but that view has not always been backed by the courts. The position taken here will actively alter circumstances for many families. That is why the courts should have the power to exercise discretion when antisocial behaviour is not the basis on which the landlord seeks possession.
This part of the legislation was conceived primarily to deal with antisocial issues, but mission creep has meant that it now has a broader remit. We are uncomfortable about the clause, as is Shelter. In other circumstances, I would push the matter to a vote, but I shall not do so, given the shortage of time. However, I give notice that we may return to this issue on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 261 ordered to stand part of the Bill.

Clauses 262 to 264 ordered to stand part of the Bill.

Clause 265

Former right to buy flats etc: service charge loans

Question proposed, That the clause stand part of the Bill.

Roger Gale: With this it will be convenient to discuss the following: Government new clause 27—Former right to buy and other flats: equity share purchases.
Government amendment No. 132

Iain Wright: This important clause enables the Secretary of State to empower housing authorities to offer equity loans—interest-free loans which pay a percentage of the market value when the property in question is sold. Owners of flats in blocks, who are known as leaseholders, cannot maintain and improve the fabric of the building and estate grounds. Instead, their landlord does that and reclaims a share of the cost by levying major works service charges. Owners of ex-council flats bought under the right to buy or on the open market will remain as leaseholders and will therefore remain responsible, under the terms of their leases, for contributing to the cost of repairs, maintenance and improvements.
A survey by London councils suggests that up to March 2007, of 154,000 council leaseholders in 26 London boroughs, 9,100 have received or expect to receive major works bills for £10,000 or more. I have met hon. Members with regard to this who are concerned about leaseholders facing high bills for major works. Clause 265 widens the range of options that landlords can use to assist their leaseholders in paying such bills.
Section 450B of the Housing Act 1985 enables landlords at their discretion to offer leaseholders interest-bearing loans. The clause amends section 450C of the 1985 Act regarding the Secretary of State’s powers to make regulations. The Housing (Service Charge Loans) Regulations 1992 already allow housing authorities to offer loans for service charges on properties bought under right to buy. In specified circumstances, loans to the original right-to-buy purchasers are mandatory. Interest must then be charged, and administrative expenses up to £100 may also be charged to the borrower.
The regulations also give housing authorities discretion to offer loans to help with service charge bills on terms of their choosing to any of their leaseholders, but it is not clear whether they are currently able to offer equity loan terms, or whether they must charge interest.
A working group of London boroughs concluded in 2005 that if landlords had the option of offering interest-free equity loans, it would increase the likelihood that leaseholders would be able to pay the money that they owe. Interest-bearing loans may be unattractive to leaseholders because the proportion of interest to principal grows over time so much that the borrower becomes liable to repay twice or even three times the amount originally borrowed.
Let me give an example, albeit I have to admit an extreme one. If a leaseholder faced a bill for major works for £30,000 and there was a period of 15 years before the property was sold, at an interest rate of 7 per cent. the amount due would be £82,771—nearly three times the amount borrowed. However, with equity share loans, the amount to be repaid will depend on the movement of the market value of the property over the period of the loan.
If leaseholders are unable to pay what they owe, the landlord has to make up the difference. Although it is always open to landlords to take the leaseholder to court and obtain a judgment that can be enforced by a charge on the property, it is clearly preferable to all concerned if that can be avoided. It is in the interests of leaseholders themselves, and of taxpayers and tenants, that landlords can offer the widest possible range of payment options. The amendment to the regulations which may be made as a result of the clause will place no obligation on landlords. Instead, it will add to the range of options available to them to use if, in their judgment, the circumstances justify it.
The provision regarding valuation of the property will enable the Secretary of State to amend the 1992 regulations so that if a landlord and leaseholder agree to a loan on equity share terms, an impartial assessment can be made by district valuers of the market value both on commencement and eventual payment of the loan. Provision can also be made for paying for the district valuer’s services.
New clause 27 seeks to give local authorities and registered social landlords the power to buy a share—formally, an equitable interest—in flats that they have let on long leases. The power is to be used for the purpose of assisting the owner of such a flat to meet some or all of the service charges that he or she is liable to pay. The new clause fulfils the Government’s commitment in our statement to Parliament on 29 March 2007 to give landlords such a power. Under the new clause, the Government, or, in Wales, the Welsh Assembly, may make regulations that give landlords this power and also impose conditions where appropriate on how it will work in practice.
We have specified that the landlord must pay the purchase price by cancelling part or all of the service charge that the leaseholder is liable to pay. This is to ensure that the money is used for this purpose only. The purchase price will be a price related to market value that is acceptable to both the landlord and the leaseholder. Either party may ask the district valuer to determine the value. The regulations may specify, as I mentioned, that the district valuer’s costs in such cases will be met by the leaseholder and deducted from the purchase price.
I should make it clear that the power to buy an equity share is not mandatory. It will be one more way in which landlords can help leaseholders to meet their obligations, and entering into such an agreement will be entirely voluntary for both parties. The Government are not seeking to specify in detail any of the terms of the contract. It will be up to the parties to reach agreement, but we intend to provide a framework so that landlords have the necessary powers.
On the basis of the hardship that some leaseholders face as a result of high service charges, I am keen to help as much as possible. I have met representatives of London boroughs to discuss the matter and instructed officials to consider using existing resources, such as funding from the regional housing pot and the private sector renewal fund, to target and assist leaseholders who might not be able to pay their service charges by any other means. That is consistent with our aim that those funds should help those in need and on low incomes.
I have to point out, though, that many local authority landlords already offer a range of payment options, but if none of those appear suitable, landlords will be able to use the power introduced by the new clause to purchase equitable shares if they and the leaseholders agree that it is the best way to help the leaseholders meet their obligations under the lease.
The new power to purchase equity shares will be introduced by means of regulations, and amendment No. 132 ensures that the new clause will be commenced by order when the regulations are laid. I hope that I have made the situation clear and that the Committee will accept the new clause and amendment.

Andrew George: I refer to a point made in an earlier debate on the application of stamp duty to the purchase of portions of a property. If the Government want to facilitate a means by which a tenant can take ownership of an equity or other share of the property, does the Minister agree that it would be unhelpful if, because of the market value of the property, the tenant found himself or herself having to pay stamp duty on the purchase of that equity share?

Iain Wright: I can understand what the hon. Gentleman is saying. In certain circumstances, stamp duty does not apply to areas that are classed as deprived areas. I am not certain what those circumstances are, but they may apply to such a case. I will examine what the hon. Gentleman said and write to him about it.
On the important basis that a number of families in London and elsewhere are facing high service charges and major works bills, I hope that the Committee will accept the new clause and amendment.

Question put and agreed to.

Clause 265 ordered to stand part of the Bill.

Clauses 266 and 267 ordered to stand part of the Bill.

Schedule 9

Disposals of dwelling-houses by local authorities

Iain Wright: I beg to move amendment No. 137, in schedule 9, page 162, line 40, at end insert—
‘( ) in subsection (1) for “Secretary of State’s” substitute “appropriate national body’s”,’.

Roger Gale: With this it will be convenient to discuss Government amendments Nos. 138 to 146 and 148 to 153.

Iain Wright: Sections 34 and 43 of the Housing Act 1985 provide powers to the Secretary of State and Welsh Ministers to grant consent to a local authority to dispose of tenanted properties. I am disappointed that the right hon. Member for North-West Hampshire is not here to combat these points with me.
The schedule amends those sections to preserve certain requirements and definitions that would otherwise be lost through repeal of section 135 of the Leasehold Reform, Housing and Urban Development Act 1993. That section requires that a local authority first be accepted by the Secretary of State on an annual disposals programme before seeking her consent to dispose of 500 or more tenanted homes under section 34 or 43 of the 1985 Act. The amendments to schedule 9 are intended to remove that prerequisite.
The amendments are relatively technical and are intended to ensure the correct application of the law in England and Wales following the devolution settlement, as housing is now a matter devolved to the Welsh Ministers. They simply replace references to the Secretary of State in sections 34 and 43 of the 1985 Act with the term “appropriate national body”, which is defined as the Secretary of State in England and Welsh Ministers in Wales.

Amendment agreed to.

Amendments made: No. 138, in schedule 9, page 163, line 1, leave out ‘(4A),’ and insert ‘(4A)—
(i) for “Secretary of State” substitute “appropriate national body”,
(ii) ’.
No. 139, in schedule 9, page 163, line 3, leave out ‘by a local authority in England, the Secretary of State’s’ and insert ‘, the appropriate national body’s’.
No. 140, in schedule 9, page 163, line 6, at end insert—
‘(iii) in paragraph (d) for “he” substitute “the appropriate national body”, and’.
No. 141, in schedule 9, page 163, line 10, leave out ‘Secretary of State’ and insert ‘appropriate national body’.
No. 142, in schedule 9, page 163, line 13, at end insert—
‘“appropriate national body”—
(a) in relation to England, means the Secretary of State; and
(b) in relation to Wales, means the Welsh Ministers;’.
No. 143, in schedule 9, page 163, line 38, leave out ‘Secretary of State’ and insert ‘appropriate national body’.
No. 144, in schedule 9, page 163, line 49, leave out ‘Secretary of State’ and insert ‘appropriate national body’.
No. 145, in schedule 9, page 164, line 18, leave out ‘Secretary of State’ and insert ‘appropriate national body’.
No. 146, in schedule 9, page 164, line 22, leave out ‘Secretary of State’ and insert ‘appropriate national body’.—[Mr. Wright.]

Iain Wright: I beg to move amendment No. 147, in schedule 9, page 164, line 23, leave out from ‘which’ to the end of line 25 and insert ‘—
(i) in the case of an order made by the Secretary of State, is subject to annulment in pursuance of a resolution of either House of Parliament; and
(ii) in the case of an order made by the Welsh Ministers, is subject to annulment in pursuance of a resolution of the National Assembly for Wales;’.
The amendment ensures correct application of the law in England and Wales following the devolution settlement. As I mentioned earlier, housing is a matter devolved to Welsh Ministers, and sections 34 and 43 of the Housing Act 1985 provide powers to the Secretary of State and Welsh Ministers to grant consent to a local authority to dispose of tenanted properties. As already mentioned, section 135 of the Leasehold Reform, Housing and Urban Development Act 1993 requires that a local authority first be accepted by the Secretary of State on an annual disposals programme before seeking her consent to a large-scale disposal under sections 34 or 43.
Schedule 9 repeals section 135, but amends sections 34 and 43 to preserve certain requirements and definitions otherwise lost. One requirement is that the cost to the Exchequer of any large-scale disposal be considered before consent is given, and the amendments provide powers to make orders with respect to such disposals. The orders might amend the number of homes considered to constitute a large-scale disposal, which is currently 500 or more, or the time period during which a large-scale disposal might be deemed to have taken place, which is currently five years ending with the date of the disposal. There are other transitional and supplementary provisions as deemed necessary.
The amendment simply makes it clear that any such order, if made by the Secretary of State, will be subject to annulment in pursuance of a resolution by either House, while any such order made by Welsh Ministers will be subject to annulment in pursuance of a resolution of the National Assembly for Wales. As with the earlier group of amendments, this is a technical matter to take into account the devolution settlement. I hope, therefore, that the Committee will accept the amendment.

Lembit Öpik: The Minister is probably not aware that there was a huge amount of debate on the relative jurisdiction of the Welsh Assembly and the Secretary of State for Wales following the most recent Government of Wales Bill. In essence, the argument was that those most in favour of devolution were concerned that the Secretary of State had, at least in theory, the power to disregard the wishes of the Welsh Assembly. Conceptually, given the technical elements of the legislation, that could recentralise decision making in Westminster regardless of the wishes of the Assembly.
I recognise that the Minister may not be able to answer the question now, but in that case I would be grateful if he would write to me. Can he clarify whether there is any situation in which an order made by Welsh Ministers could be annulled or modified by the Secretary of State for Wales? I stress again; he may not have the answer now, but, in the Welsh context, it would help me to have an answer at some point.

Iain Wright: The hon. Gentleman is right; I do not have the answer to hand, but I will write to him and copy other Members of the Committee in.

Amendment agreed to.

Amendments made: No. 148, in schedule 9, page 164 line 30, leave out ‘Secretary of State’ and insert ‘appropriate national body’.
No. 149, in schedule 9, page 164, line 38, at end insert—
‘( ) in subsection (1) for “Secretary of State” substitute “appropriate national body”,’.
No. 150, in schedule 9, page 164, line 39, leave out ‘(4A),’ and insert ‘(4A)—
(i) for “Secretary of State” substitute “appropriate national body”,
(ii) ’.
No. 151, in schedule 9, page 164, line 42, leave out ‘by a local authority in England, the Secretary of State’s’ and insert ‘, the appropriate national body’s’.
No. 152, in schedule 9, page 164, line 44, at end insert—
‘(iii) in paragraph (d) for “he” substitute “the appropriate national body”, and’.
No. 153, in schedule 9, page 164, line 48, leave out ‘Secretary of State’ and insert ‘appropriate national body’.—[Mr. Wright.]

Iain Wright: I beg to move amendment No. 154, in schedule 9, page 165, line 8, at end insert—

‘Housing Act 1988 (c. 50)
In section 133(3) of the Housing Act 1988 (consent required for certain subsequent disposals)—
(a) in paragraph (a) for “and (3) to (4A)” substitute “, (3), (4) and (4A)(a) to (c) and (d)”,
(b) in paragraph (b) for “and (3) to (4A)” substitute “, (3), (4) and (4A)(a) to (c) and (d)”, and
(c) in paragraph (c) for “(4A)” substitute “(4A)(a) to (c) and (d)”.’.

Roger Gale: With this it will be convenient to discuss Government amendment No. 155.

Iain Wright: Amendment No. 154 is a consequential amendment necessitated by amendments to the Housing Act 1985 caused by Schedule 9 to the Bill. Section 133 of the Housing Act 1988 deals with onward disposals of homes. It requires that should an organisation, which in practically every case is a registered social landlord, want to dispose of homes that a local authority has transferred to it—as a result of the Secretary of State granting her consent to do so, under section 34 or 43 of the Housing Act 1985—it must obtain the consent of the Secretary of State before doing so.
The requirement was introduced to give local authority tenants whose homes were passing out of local authority ownership some comfort that, should their new landlords want to sell on their homes, the Secretary of State would ensure that they were properly protected. Section 133 requires that before granting consent the Secretary of State should take into account matters considered when granting the original consent under section 34 or 43. The amendment does not change the position; indeed, it preserves it. It is necessary because the current provision refers to section 135 of the Leasehold Reform, Housing and Urban Development Act 1993, which schedule 9 repeals.
The amendment requires the Secretary of State to consider the Exchequer costs of a further disposal because that should have no impact on Exchequer costs. If a local authority makes the onward transfer, so the transfer is the first transfer away from local authority ownership, the Secretary of State will be required to give consent under section 32 or 43 of the Housing Act 1985, and will consider the Exchequer costs in that event and at that time. Value for money and any effect on the public purse is already considered as part of the consent process.
The first part of amendment No. 155 is simply a clarification. Schedule 9 ensures that definitions contained in section 135 of the Leasehold Reform, Housing and Urban Development Act 1993 are preserved by inserting them into section 136 of that Act. The amendment makes it clear that the reference to the Secretary of State in the transplanted definitions should be read in the same way as references to the Secretary of State elsewhere in that section.
The second part of amendment No. 155 relates to definitions of social landlords and registered charities for the purposes of section 51 in schedule 1 to the Housing Act 1996. The definitions include a body that had been the recipient of a large-scale disposal of property by a local authority under section 135 of the Leasehold Reform, Housing and Urban Development Act 1993.
As I have said several times this morning, schedule 9 repeals section 135 but retains the definition of a large-scale disposal through amendments to section 34 or 43 of the 1985 Act. The amendment therefore amends the definitions in the Housing Act 1996 to ensure that they include organisations that have inherited a large-scale disposal of stock either under section 135 or in future under the amended sections 34 or 43.
I hope that I have explained the situation adequately.

Amendment agreed to.

Amendment made: No. 155, in schedule 9, page 165, line 44, at end insert—
‘(5) The reference to the Secretary of State in subsection (15) of section 136 of the Act of 1993, as inserted by sub-paragraph (3) above, is to be read in the same way as other references to the Secretary of State in that section of that Act.

Housing Act 1996 (c. 52)
(1) The Housing Act 1996 is amended as follows.
(2) In section 51(2)(b) (schemes for investigation of complaints) for “a qualifying disposal” substitute “—
(i) a large scale disposal, within the meaning of section 34 of the Housing Act 1985, for which consent was required under section 32 or 43 of that Act; or
(ii) a qualifying disposal that was made”.
(3) In paragraph 5(1)(b) of Part 2 of Schedule 1 (constitution, change of rules, amalgamation and dissolution: restriction on power of removal in case of registered charity) for “a qualifying disposal” substitute “—
(i) a large scale disposal, within the meaning of section 34 of the Housing Act 1985, for which consent was required under section 32 or 43 of that Act, or
(ii) a qualifying disposal that was made”.
(4) In paragraph 28(1)(b) of Part 4 of Schedule 1 (inquiry into affairs of registered social landlords: availability of powers in relation to registered charities) for “a qualifying disposal” substitute “—
(i) a large scale disposal, within the meaning of section 34 of the Housing Act 1985, for which consent was required under section 32 or 43 of that Act, or
(ii) a qualifying disposal that was made”.’.—[Mr. Wright.]

Schedule 9, as amended, agreed to.

Clause 268

Financial assistance for information and other services

Amendment proposed: No. 117, in clause 268, page 113, line 21, leave out ‘and’.—[Mr. Wright.]

Roger Gale: With this it will be convenient to discuss Government amendments Nos. 118 to 122.

Iain Wright: Amendments Nos. 117 and 118 make changes to clause 268, which in turn widens the existing power in section 94 of the Housing Act 1996 for the Secretary of State in England and Welsh Ministers in Wales to give financial assistance to any person in relation to the provision by them of general advice about landlord and tenant law and estate management schemes in connection with leasehold enfranchisement.
Amendments Nos. 119 to 122 make changes to clause 273, which widens the existing power in section 62 of the Commonhold and Leasehold Reform Act 2002 for the Lord Chancellor to give financial assistance to any person in relation to the provision by them of general advice about an aspect of the law of commonhold land so far as it relates to residential matters.
The purpose of clauses 268 and 273 and the amendments is to widen the existing powers contained in section 94 of the Housing Act 1996 and section 62 of the Commonhold and Leasehold Reform Act 2002 to allow financial assistance for the giving of information, training and dispute resolution services in relation to the matter specified.
The power under the Housing Act 1996 is used by the Department for Communities and Local Government and the Ministry of Justice to provide grant in aid to fund the Leasehold Advisory Service, known as LEASE, an executive, non-departmental public body which I am sure that hon. Members have contacted in relation to constituency matters. LEASE also provides an important front-line advisory role in respect of residential leasehold law as it affects England and Wales, as well as other leasehold-related functions.
The Welsh Assembly Government also uses section 94 to provide a contribution, currently in the region of £17,000 a year, towards the services that LEASE provides to leaseholders in Wales.
The power under the Commonhold and Leasehold Reform Act 2002 is currently used by the Lord Chancellor to fund the Leasehold Advisory Service to provide advice on the law of commonhold land relating to residential matters.
The need for these amendments came to light, Mr. Gale, after clauses 268 and 273 had become part of the original Bill. These amendments are important in that they allow the clauses to achieve their original intention. Amendments Nos. 117 and 118 allow funding to be given for the provision of advice, information and a dispute resolution service for leaseholders and the leasehold sector in general in relation to a wider range of leasehold-related matters.
There was concern that the advice had to be restricted to legal matters. The amendments, combined with clause 268 itself, would create a funding provision that is more appropriate to today’s needs, and to the provision of good, independent general advice and related services for leaseholders and the leasehold sector in general.
As for amendments Nos. 119 to 122, the original intention underlying clause 273 was to enable the Lord Chancellor to fund a wider range of services, including information, training and dispute resolution in relation to residential commonholds. These services will supplement the funding of general advice. They will increase knowledge of commonhold and improve the quality of the experience of living in a commonhold. The amendments also make it clear that the funding may be used even if the matter at issue is not strictly a matter of commonhold law narrowly defined.
I hope that I have explained the situation adequately, Mr. Gale.

Amendment agreed to.

Amendment made: No. 118, in clause 268, page 113, line 22, at end insert—
‘(c) at the end of paragraph (a), after “tenancies,”, insert—
“(aa) any other matter relating to residential tenancies,”, and
(d) in paragraph (b), at the beginning, insert “any matter relating to”.
(2) In the heading of section 94 of that Act (and the italic cross-heading before it) for “legal advice” substitute “advice etc.”’.—[Mr. Wright.]

Clause 268, as amended, ordered to stand part of the Bill.

Clause 269

Exclusions from Subsidy Arrangements

Question proposed, That the clause stand part of the Bill.

Robert Syms: I am sorry, as we are making good progress, to slow things down a little.
Clause 269 deals with housing revenue account subsidy and, although it is only one clause, it is quite an important element of the Bill. I am not sure that we have learnt an awful lot about what Government plans are in relation to the subsidy. I want to draw the Minister a little bit more on what the Government want to do in this area.
In the oral evidence session, the Local Government Association representatives said that in principle they would like to see some reform, particularly where money is taken from some local authorities to subsidise other local authorities. In the current year just under £3 million will go from the Poole housing partnership into the national subsidy arrangements, which is £12.03 per tenant per week. Housing is a problem in Poole and one would prefer at least some of those resources to stay in the local area.
The Library has provided me with the information, Mr. Gale, that in 2006-07 the total subsidy under the housing revenue account subsidy arrangements was £707,727,683, of which £562,492,298 came from the Government. The point of my concern is the £115,235,385 that came out of some local authorities to subsidise other local authorities.
All parties accept that need has to be a major element in the provision of housing and there are special problems in central London and some of our bigger cities, but I do think that the Government should explain why they are taking money paid by tenants in rent out of some areas to subsidise rent-paying tenants in other areas.
There are some anomalies. I have the list that shows what the Government call the negative subsidy entitlement, which is the money that people put in. We are not necessarily talking about leafy suburbs putting money into the arrangements.
I shall pick up a few examples. In 2006-07 the London borough of Barking contributed just under £11 million of its tenants’ rent to the national subsidy scheme. I seem to remember that there was a question relating to housing and the British National party in the borough of Barking in east London. One wonders whether putting £11 million into a national subsidy scheme from rents paid by the tenants in that area is a sensible idea.
In Bolsover, just under £4 million goes from council tenants into the national scheme; in Castle Morpeth it is £500,000; in Chesterfield it is just under £3 million; Chester le Street contributes £1.8 million. Those are not necessarily the leafiest areas. From the tenants of Durham, £1,671,546 was used to subsidise people elsewhere. I am not familiar with Durham, it may be a very leafy place in the north-east, but I suspect that there is a need for those funds. I can tell the hon. Member for Ealing, Acton and Shepherd’s Bush that Hillingdon contributes £8 million to the arrangements. Welwyn Hatfield gives under £12 million. That is quite a lot of money from a relatively small town.
I would really like the Government to set out their plans. The largest element of subsidy comes from the taxpayer. If housing need is the key matter, it is right that the taxpayer should fund it through the national system of taxation, but £115 million comes from contributions from the majority of districts and boroughs, in order to subsidise relatively few but, I suspect, quite needy authorities.
I would like to know how the Government want to proceed under the clause. They evidently have some thoughts about reforming the system. I cannot see an argument for taking money paid by some tenants in rent—although perhaps not in some areas that have their own problems, such as ex-coalfield areas—and using that money principally to subsidise some of our large cities and central London. The Government should look at reforming that situation. Given the amount of money, even to express their intention of phasing out the subsidy over a period of years would be helpful for authorities that are making a contribution to the national pool. When I talk to my own housing authority, I am told that if the money were allowed to remain locally it could help deal with voids in maintaining properties, and could also be an income stream for new build.
If we accept the principle of localism—that it is better that money raised locally remains local—there is not a strong argument for taking the £115 million in 2006-07 that I have mentioned from authorities in subsidy arrangements. I know that there is concern among not only Conservative but Liberal Democrat and Labour authorities about the way the scheme operates. I do not think that it is particularly fair, and I hope that the Government can clarify under clause 269 what sort of proposals they will be making for reform.

Andrew George: I congratulate the hon. Member for Poole on initiating the debate on this matter. There is certainly a perceived injustice among those authorities that lose out under the measure. Given that there is also a perceived lack of transparency in the way in which resources to be transferred between authorities are calculated, those authorities that lose out under this measure have little motivation to comply. All the incentives, in fact, work against a just system; the justice of social housing finance needs to be clearer. Those authorities that are losing out, as the hon. Member for Poole quite rightly identified, clearly wish to have the matter addressed. I hope that the Government will address that point on Report and perhaps make clear how that perceived injustice will be corrected.

Roberta Blackman-Woods: I welcome the Government’s intention to look at the housing revenue account, and I am very grateful to the hon. Member for Poole for carrying out such assiduous research into my constituency. It was enormously helpful, so thank you.
A number of councils have signalled that it would be very helpful if they could spend surpluses in their revenue accounts locally. It could transform their ability to carry out repairs and bring houses up to the decent homes standard. It could also create reinvestment in local social housing. I thank the Minister, therefore, for considering the matter, and look forward to what he has to say about changes that might be made.

Andrew Love: I, too, welcome clause 269. In future years, I think that we will look back on it as possibly one of the most important parts of the Bill. As I understand it, it will provide the ability to exclude housing authorities from the housing revenue accounts subsidy arrangements, for either some or all of their properties. That could be done not just for existing properties but for those yet to be built, which is quite an important consideration. I look on that as a decentralisation measure that will give housing authorities more local control over decisions on future investment and critically—I shall come back to this—over decisions on income received and, in particular, on the setting of rent levels.
As the hon. Member for Poole mentioned, the clause also maintains the current national redistributive system, which, as a London Member, I support, given the particular difficulties in London and in urban areas in general. That system ensures that the share of overall housing resources nationwide is maintained. When people say to me, “The big London authorities, and in particular some of the inner London authorities, receive a subsidy of about £15 per tenant”, I point out that rent levels in inner London are significantly greater than in almost any other part of the country.
The aim is to maintain the fiscal neutrality of the redistributive system, and we could get into the equations for net present values and all the rest. However, I shall focus on the important point. According to figures from 2005, 82 per cent. of housing authorities control 63 per cent. of the stock and they receive no subsidy from the system. So they could choose—one hopes—to opt out of the current subsidy arrangements. However, some of those authorities are concerned that the additional debt that they will have to take on through the net present value calculation will make it difficult for them to exercise that choice on their current incomes. Will the Minister address that point? What lessons has he learnt that could assist authorities that wish to exercise their right to exclude themselves from the HRA arrangements?
The most important aspect, and one that has not really been touched on, is the desire of many local councils to build new houses to meet the housing need in this country. Estimates are relatively modest. As we know, for quite some time there has been no real council house building—there have been a couple of hundred houses here or there, but effectively the councils do not make a contribution. This measure will enable a modest increase to something in the region of 2,500 to 3,000 council houses, which I welcome, although I accept that it may be just the start.
In welcoming the clause, my second question to the Minister is about the pilot schemes that are in place with a number of local authorities. Can he give us a reassurance that he will continue to look at the issue and, where possible and where value for money can be achieved, he will welcome more council house building as a contribution to the country’s overall need?

Grant Shapps: I rise to thank my hon. Friend the Member for Poole for his great research and for initiating a debate on this subject. This is an incredibly complex area and the other day I heard the Minister for Housing acknowledge that complexity. Once we start talking about negative subsidy arrangements, the mind starts to boggle, not just for lay people like us, but for the housing officers and finance officers in councils up and down the country who scratch their heads to try to get to the bottom of these very detailed arrangements. It is clearly a matter that requires Government attention, and I was pleased to hear the Minister for Housing give an undertaking to do that the other day. I am curious as to why it is not included within the current legislation—perhaps the Bill could have gone further in starting to resolve the problem.
It is incredibly difficult for local authorities. My hon. Friend the Member for Poole mentioned my own constituency of Welwyn Hatfield—a small borough in what I am sure the Government believe to be leafy Hertfordshire. In fact, it is a place with very significant housing needs. One of my wards, Peartree ward, is one of the most deprived and I would challenge the Minister, or anyone else, to come to Welwyn Hatfield and visit that deprived ward and not to come away believing that it is an area with significant need.

Nick Raynsford: The hon. Gentleman alluded to the complexity of the housing revenue account subsidy system. Does he recognise that the fact that Welwyn Hatfield is not a recipient of subsidy is a reflection of the historical pattern of the provision of the housing stock by a new town development corporation that did not result in the local authority having to acquire the same level of debt, and therefore entitlement to subsidy, that would apply in other areas? It is purely because of those historic circumstances that his authority does not acquire subsidy. It is precisely that pattern which relates to the debt of individual authorities, and therefore subsidy entitlement, and which has created a framework that looks so bizarre.

Grant Shapps: I am grateful to the right hon. Member for Greenwich and Woolwich for that intervention. His knowledge and interest in the detail of housing is recognised across the House. He is absolutely right about the historic nature of the formation of what are effectively two new towns—Welwyn Garden City and Hatfield. However, to say that today’s residents must for ever pay for some historic creation of housing a long time ago—last year in 2006-07, the negative subsidy amounted to close on £12 million, and this year it is even more—is, I think, unfair on current residents of a borough such as mine and many others across the country. We must eventually recognise that it is unfair to continue paying out in support of some notional argument about the way in which the housing was originally created.
The modern-day reality is that not only does a council such as mine find itself in extreme financial difficulty as a result of the complexities of the negative subsidy arrangements, but this year in particular, the arrangements have not been made known to local authorities in order to allow them to plan. That is unacceptable. As I understand it, they would usually have a good idea before the new year. This year the announcements have come much later. I ask the Minister to recognise the problems that that creates in setting the council tax for the year ahead.
It is widely acknowledged that there are problems with the current system. I welcome the Government’s view on reviewing the process and look forward to the Minister’s further comments on the subject.

Iain Wright: I have enjoyed this debate. I agree with my hon. Friend the Member for Edmonton when he says that, of all the clauses in the Bill, this will be highlighted as one of real historic significance. I know that officials always faint when I start saying this, but, as a former borough councillor, I am very excited to say that this is the return of the council house. We are trying to remove from local authorities the disincentives to build homes. I shall just turn around and check whether any officials have fainted.
However, as a former borough councillor, I am excited by the fact that local authorities will have a direct role, where it proves value for money, in the delivery of an increased supply of housing in their area. That is a tremendous challenge, but it is also a tremendous opportunity, and, as a Minister with responsibility for housing, I am pleased that I have been able to help facilitate it by pushing the Bill forward.
This one clause provides the necessary legislative changes to enable us to implement two important and inter-related policies. First, as hon. Members have said, it will allow us to exclude the whole of a council’s stock from the housing revenue account subsidy system, subject to agreement with the respective council. This is generally known as self-financing. Under the arrangement, the council would in future keep all its income from rents and other charges rather than paying surpluses or receiving subsidies based on a set of allowances. That will allow local authorities to service debt in order to build new council houses.
Hon. Members have mentioned the six pilots. Evidence from them seems to suggest that self-financing could provide a range of benefits. I shall highlight just some of them. The pilots have suggested that there is the potential to deliver more efficiencies, to deliver better asset management, to lever in more private investment and, crucially, to create opportunities for local authorities to add new supply.
Several hon. Members have spoken about how short-term planning does not help anybody in moving forward with council stock. The hon. Member for Poole spoke about that extraordinarily well—in that respect, he crossed the Floor. The modelling seems to suggest that we could have efficiencies of some 10 to 20 per cent. from better planning of investment and repairs. For example, moving from piecemeal, reactive maintenance to a more planned longer-term cycle of major and minor repairs could help cut costs.
I was taken with the hon. Gentleman’s discussion of the fact that the HRA subsidy system is a national system based on how much there is to spend, how much there is a need to spend and how much money local authorities need to maintain and repair their stock. I am conscious of the fact that there are local considerations to take into account. The pilots seem to suggest that self-financing could provide a direct link between what people pay in rents and charges and what they receive in services. Therefore, it could allow future decisions to reflect local choices and increase local accountability.
There is more ability and more scope for better strategic asset management, including a better phasing of replacements, disposals and major estate remodelling schemes to meet changing local needs, and, crucially, there is more scope for increased investment. The pilots suggest something like a doubling of projected levels of capital investment over 30 years through things such as private finance, additional prudential borrowing and additional rents from new-builds and reprovision. So there is great potential that we need to tap into, and I am keen to do that.
Secondly, the clause will enable us to exclude specified properties within a council from the HRA subsidy system, including future properties. Again, this will be subject to agreement with the council. It will be used to allow councils to apply to exclude new homes added to the HRA in future.
No provision is made within the HRA subsidy allowance for financing the capital costs of new council housing. The Bill’s provisions will therefore enable councils, subject to entering into an agreement, to keep the full rent from a new home and to use the element not needed to meet the running costs to help finance the costs incurred in providing that new home.
The amount of extra money that that will give the council will depend on the type of housing provided, but on average, as we have mentioned in relation to the redistribution element, the subsidy system assumes that running costs are equivalent to about three quarters of the rental income. The remainder is pooled and redistributed to support HRA debt in councils across England, but in the future could be used to finance the debt incurred in providing the new homes. Again, there is tremendous scope and potential there.
Of course, we have to recognise, as my hon. Friend the Member for Edmonton mentioned, that even the full income from a social rent will not be enough to service the debt to finance the provision of the new home. In every case, as has been mentioned in our consideration of the Bill, we would expect a council to provide land on which to build the homes and there could be scope for a community land trust to help push that deal forward. Further capital subsidy might be provided from some of the capital receipts.
In many cases, it will still be better value to join up with a registered social landlord to deliver the new housing in order to benefit from the levering in of private finance. Where a council wants to do its own development and give direct provision, the clause will ensure that, as with an RSL scheme, the business case can be made on the basis of the full return from the investment. That will make a significant difference, which we think will encourage more councils to consider that option. I suggest that it is an extremely exciting era.
Alongside the provisions in the Bill, the Government believe that we need to look more widely at the system for financing council housing. I pay tribute to what the hon. Member for Poole said with regard to that. The hon. Member for Welwyn Hatfield mentioned my right hon. Friend the Minister for Housing, who last week during oral questions on the Floor of the House mentioned that after we discuss the RHA subsidy system we need to lie down with a wet towel around our heads, and she is absolutely right. That is why she announced a review of the HRA subsidy scheme on 12 December. I have provided copies of that statement for members of the Committee so that they are fully aware of what is going on. The written ministerial statement that my right hon. Friend provided sets out the form and purpose of the review.
We need to address the concerns that the hon. Member for Poole mentioned. I do not want to pre-empt the finding of the review during its early stages, but I think that we need to establish a long-term, sustainable system for financing council housing that enables councils to plan, not for the short term, but effectively for the long term. The current system relies too much on short-term funding decisions that are based on an assessment of short-term expenditure needs. It is in no one’s interests for that to continue.
I agree with the hon. Member for Welwyn Hatfield that the annual subsidy determination process has become more difficult as we balance competing and conflicting interests from tenants, taxpayers, landlords and government. We need a longer-term settlement that is fair, as far as possible, to all of those groups, and the review will help us to achieve that.
I do not want to say much more on this significant clause. It has been an incredibly interesting debate and we are entering an exciting era that has a longer-term perspective on the HRA system. We need to get things exactly right on competing and conflicting priorities. As my hon. Friend the Member for Edmonton mentioned, moving away from an era when we were building 245 council houses a year to one when we will build several thousand a year at least is an important step that will help improve housing supply and ensure that we address the country’s acute housing needs. That will ensure that council housing can have a direct role in the provision of housing if there is the political will for it to do so and if it provides value for money. This is a great opportunity and I am grateful for the opportunity to speak about this.

Question put and agreed to.

Clause 269 ordered to stand part of the Bill.

Clause 270

Armed forces: homelessness and allocation of housing

Question proposed, That the clause stand part of the Bill.

Grant Shapps: I support the clause. I think that every hon. Member has had somebody come into their surgery who has returned from one of the world’s conflict areas having fought bravely for this country and that person is surprised to find themselves at the bottom of the housing ladder. In many cases, they are worse off than somebody who has been permanently within the area. Two different problems occur.
First, when somebody is in the armed forces they are probably not much thinking about the need to gather and gain points within a local authority to rise up the housing need scale. Secondly, often the nature of going away and fighting in the armed forces means that you come back and your life is not as it was when you left. In particular, the area that you call home is ill defined to the extent that there is not a home authority for that member of the armed forces. There is a case that I can think of in my constituency and, speaking to hon. Members, I know that cases are found elsewhere. It becomes unclear which authority they should be applying to and I have come across instances where no authority is initially prepared even to add that individual to its list of people in housing need. That is unsatisfactory for a group of people who have risked their lives on behalf of this country, as is the secondary point that even when they are recognised by an authority because there is a link to the area, they find themselves at the bottom of the list and starting from scratch. The amendment addresses that issue. In areas with significant housing need—in the south and elsewhere—points need to accumulate, sometimes to over 100 points, in a local authority area, before there is any chance of being housed at all. It is not a coincidence that the people that I have met working in homelessness and rough sleeping have so often had experience in the armed forces before becoming homeless. I think that one in five people who sleep in the streets, for example, have been in the armed forces.

Lyn Brown: Has the hon. Gentleman read the social exclusion unit report regarding rough sleeping produced by the Government some years ago? It is clear that the issues around armed forces personnel finding themselves on the street are myriad, and include mental health, losing the camaraderie and the institutionalisation of being in the armed forces. Does he accept that those, and not the issues that thankfully are being rectified by the clause—which I wholeheartedly support—are the predominant issues?

Grant Shapps: I am grateful for hon. Lady’s intervention. She is right that the issues that contribute towards homelessness, including among former members of the armed forces, are incredibly complex. Any attempt to pretend that there is one silver bullet—an individual thing that one can do—or one single cause is hugely misguided. Of course, one factor is the amount of social housing provision. It remains a fact that in every year of the past 10 years less social housing has been built than in every year of the previous 18. That means that the amount of housing available for people coming back from conflicts has diminished. It affects people across the picture, particularly those returning from conflict.

Andrew Slaughter: The hon. Gentleman has a habit of throwing in statistics as soundbites. Does he accept that on social housing, the rot set in with the decline in council house building? There is a very useful table in the Unison briefing, showing that, in 1979, some 75,000 council houses were being built. Now, belatedly perhaps, the Government are addressing the issue, so will he give them some credit, rather than just point scoring?

Grant Shapps: I am grateful to the hon. Gentleman for raising that issue, because I know that the Government Front-Benchers, and now it turns out the Back-Benchers, do not like to hear the facts, which are that far fewer social houses have been built.

Lyn Brown: Will the hon. Gentleman give way?

Grant Shapps: May I answer the first point before giving way again? It is a fact. It is hard to escape it and it may be inconvenient, but if the hon. Gentleman says that more social housing should have been built, he may be right. This Government have had not 10 but almost 11 years during which they could have built that housing.

Roger Gale: Order. Before we go any further down that road, this is not a Second Reading debate, fun though it might be; it is a debate about armed forces housing. That is what the clause is about, so it would be a good idea if we stuck to it.

Grant Shapps: Thank you, Mr. Gale. I apologise for allowing myself to be goaded off the subject.
The overall supply of social housing has a big impact on our returning armed forces, and perhaps at another time we can continue the debate about how best to supply it. All parts of the House, however, will agree that when people have served this nation, they should have a right to reconnect with society. The local authority must not only accept them on to its list, but go a little further than the clause by acknowledging that their need is greater than merely to be accepted by an area, and that they need points to have a realistic chance of getting into a property without having to join the back of the queue.

Nick Raynsford: Does the hon. Gentleman recognise that the clause is about ensuring that access to council accommodation or social housing should be available on the basis of need rather than local connection? We are remedying a change made by a Conservative Government in 1996, which imposed a residence test that is unhelpful to members of the armed forces. It was not in the original Housing (Homeless Persons) Act 1977, which sought to meet people’s needs without that consideration. We are now remedying a mistake that the previous Conservative Government made.

Grant Shapps: I am grateful for the intervention, but I shall leave it to others who were around at the time to discuss previous Acts. I am very pleased, however, to see the provision in the Bill. The big difference is that, in the past decade, our armed forces have been sent to war far more than in any recent period. Those wars have continued for a long time, and service has been distant from this country, so the issue has been brought into much sharper focus. I certainly support the clause, but I urge the Minister to go further and not only create a connection with the local authority, but prioritise the housing needs of those returning from armed conflict.

Andrew Gwynne: I, too, welcome the provisions in the clause and the way in which it alters the provisions of the 1996 Act. Like the hon. Member for Welwyn Hatfield, I understand that, under current housing legislation, it is often difficult for members of the armed forces who are nearing the end of service or returning to the UK to show that they have a local connection with the district council area where they have been serving, living or are returning to. Since becoming a Member, I have had a small number of such cases in my constituency casework. The problem means that they become a low priority for council housing because they have relatively low point allocations. If they go on through the homeless register instead of the council allocation and if they are accepted as being homeless, they are often removed to another local authority area where they have a previous connection rather than being considered for homeless accommodation in the district in which they have applied for housing.
Will the Minister confirm my reading of the clause—that it will ensure that armed services personnel will be considered to have a local connection with an area in which they are stationed or living, in order to equalise their status with the local civilian population? If so, it will enable them realistically to be considered for council housing in their local areas as they move from military life back to civilian life. I would welcome that.

George Young: I, too, welcome the clause, but does it extend to the families of military personnel? The explanatory notes say that the effect of the clause is that
“a person in the armed forces will now be able to establish a local connection with a district...in the same way as a civilian.”
However, a common scenario is when a family is in married quarters and the couple’s relationship breaks down or the one who is on active service, usually the husband, leaves the armed services, leaving the family in those quarters. At that point, the MOD says, quite reasonably, that it needs the married quarters and serves a notice on the family to quit. Does the help in clause 270 extend to the family of the personnel member and enable them to establish a local connection in the same way?

Iain Wright: I am pleased that both sides of the Committee agree that the clause is important. I welcome the words of the hon. Member for Welwyn Hatfield on the clause and am more than happy to help him draft a press release to the effect, “Shapps praises Government on Housing and Regeneration Bill”. Perhaps we can do that some time this evening. Somehow, though, I suspect that will not be the case.
Regardless of which areas we represent, we all know from our constituency work that former services personnel have had a battle to obtain social housing, because they are not treated as having a local connection with the areas in which they have been serving. Let me put on record that it is absolutely unacceptable that they should be put at a complete disadvantage because of their service to the country. On the contrary, we must provide our servicemen and women with the best possible support as they move back to civilian life. I hope that I can reassure my hon. Friend the Member for Denton and Reddish regarding his concerns. His reading of the Bill is exactly my understanding of it. I hope that provides some reassurance.
That is why the clause will amend the Housing Act 1996 to enable service personnel to establish a local connection with the district in which they are serving or have served for the purposes of allocating social housing under part 6 of the Act and providing homelessness assistance under part 7. Broadly speaking, a person has a local connection with a district if he is or was normally resident there by choice. Additionally, someone may have a local connection with a district because he or she is employed there, has family associations there or because of special circumstances.
Whether someone has a local connection with a district can be relevant when they seek social housing, because the 1996 Act allows local authorities to take local connections into account when deciding who gets priority for social housing. Local connections are also relevant in respect of homelessness, because people who are accepted as being unintentionally homeless and in priority need who do not have a local connection with the district in which they have applied for help may be referred to another authority in which they do have a local connection.
As my right hon. Friend the Member for Greenwich and Woolwich eloquently pointed out, and I would like to put it on record as well, under the current legislation, service personnel and their families are specifically excluded and are treated as not having established a local connection with a district because of employment or residence while serving in the forces. I think that the whole Committee will agree that that is simply unacceptable. Clause 270 will remove the provisions that prevent service personnel from establishing a local connection in those circumstances. That will mean that residence and employment of serving members of the armed forces will be taken into account in the same way that it is for civilians who live and work in a district.
The right hon. Member for North-West Hampshire mentioned a specific point about families and particularly wives trying to establish a local connection when a marriage breaks up and a wife and family are left living in married quarters. I reassure him that his reading of that situation is correct. However, the question of whether a wife will establish a local connection because of residence in these or any other circumstances will depend on the usual factors that apply to everyone: namely, whether she was normally resident there and whether it was a residence of her own choice.

George Young: I am slightly worried about the term “residence of her own choice”. By definition, this is not a residence of her own choice, but a condition of her husband’s employment. Will the Minister assure me that that will not debar her from access to local authority housing?

Iain Wright: I apologise to the right hon. Gentleman for not making myself clear. Wives will be able to establish a local connection under the clause. I hope that that provides the reassurance that he needs.

Andrew Love: I thank my hon. Friend for taking up the point that is agreed across the Chamber of the importance of providing ex-service personnel with accommodation. He has given reassurance in relation to the district where they have been based, but that district is often not where they would wish to remain because bases are outside urban areas or because they want to return to the town in which they were born. They can often find themselves in those difficulties and will not be able to establish a local connection, even though they might have lived there for a considerable period. Will the Minister reassure the House that the concerns for personnel who do not want to remain in their district will be taken into account?

Iain Wright: I hope that I can provide that reassurance. In the circumstances that the hon. Gentleman outlined, a local connection would remain. If a wife wanted to move back to where she was brought up, she would have a local connection there already. I am pleased that the whole House supports the clause. I think that clauses 269 to 272 are, in their different ways, extremely important parts of the Bill and of housing policy. It is important that we ensure that servicemen and women are put on an equal footing when applying for housing.

Question put and agreed to.

Clause 270 ordered to stand part of the Bill.

Clause 271 ordered to stand part of the Bill.

Clause 272

Protected mobile home sites to include sites for gypsies and travellers

Roger Gale: The clause was originally linked with new clause 15 in the expectation that a member of the Committee might sign the new clause, but none has. The guidance notes for Committees indicate that where an amendment or new clause is not signed by a member of the Committee, it should not normally be called. Therefore, I do not propose to invite a debate on new clause 15 at this stage. If, however, any hon. Member wishes to retable it on Report, that is a matter for them. It is not for me to predetermine what Mr. Speaker or the Chairman of Ways and Means might chose to call on Report. However, I imagine that the fact that it was tabled but not called here might be looked upon tolerably or favourably.

Question proposed, That the clause stand part of the Bill.

Grant Shapps: As I understand it, the clause will rectify a problem caused by a case that the Government lost in the European Court.

Andrew Slaughter: I would be interested to know what the hon. Gentleman means by a “problem” in this context.

Grant Shapps: The Government lost the case and the law therefore needs to be amended. Because I think the hon. Gentleman’s intervention indicates one of the difficulties of discussing this issue, I want first of all to put on record that in my constituency there are three Gypsy and Traveller sites. One is called Barbaraville—set up by the late Barbara Cartland—and has been there for 45 years. In the last couple of years, I have spent considerable time defending the rights of those citizens against a plant that was going to be built next door by Thames Water for £5 million that would have seriously degraded the quality of life of those Gypsies who live on the Barbaraville estate.
I consider constituents of mine—regardless of where they live in my constituency and in what housing—to be absolutely equal under the law and had no hesitation in coming forward to defend their rights. However, I am concerned that what this clause will do is effectively set up a specific rule for a particular group of people.
Romany Gypsies and Irish Travellers are defined as a minority ethnic group under the Race Relations Act 1976. What this clause does is to provide specific legislation with reference to that particular ethnic group. I know that the Minister has probably included the clause with some hesitation as a result of the court case.

Andrew Slaughter: I am grateful to the hon. Gentleman for giving way—and I will speak in a moment myself—but may I urge on him some caution in what he says? I am finding the words he is using somewhat offensive, and that an hon. Member has to go out of his way to say that all his constituents are treated equally does not to my mind imply that that is the case, but rather implies a presumption of the opposite. I think he is getting a little into dog-whistle politics and that he ought to think quite carefully before this—I hope quite uncontroversial—clause stands part.

Grant Shapps: I am grateful for the hon. Member’s intervention but rather confused by it. I understood from his original intervention that he was immediately expressing some concerns because I was querying this particular clause, so I wanted to put on record in a way that was beyond any doubt or concern whatsoever, that I think that the rights of every citizen in this country must be protected. Now I ask him to take my assurance at face value, because that is exactly how it is meant.
I do, however, believe that when we start to legislate to provide particular benefits to one particular defined ethnic group, we are in danger of creating other imbalances. This is a perfectly reasonable point to make in what I hope is a very controlled, rational and calm way: I think that for legislation to pick out individual groups based on ethnicity is a dangerous approach to take to this House creating legislation. The accusation that this is somehow dog-whistle politics, I actually find very surprising—not least because I cannot imagine who the hon. Member for Ealing, Acton and Shepherd's Bush thinks I am trying to talk to in this.
I am merely trying to ensure that the legislation we pass is appropriate and of a high standard—and in this particular case I am concerned that there is a clause that seeks to provide a particular approach to one particular group based on ethnicity. I think that is the wrong approach for Parliament to take and I ask the hon. Member to consider again his comments.

Iain Wright: The hon. Gentleman has been generous in giving way. Can he clarify to the Committee what additional benefits we are providing in clause 272?

Grant Shapps: I spent a Friday evening with residents in one part of my constituency, Bell Bar, who were concerned that a report was recently published which identifies a piece of land near them as a possible location for a Gypsy and Travellers site. The reason that the allocation is required—as the Minister will know—is that the Government have told the regional structure of government to find additional sites and tell local authorities where to provide them. The residents’ concerns are many, but my specific concern is that we have three Traveller-Gypsy sites in my constituency, all of which operate extremely well. There is no obvious requirement for more, given that the number of temporary Traveller encampments has fallen in recent years, yet provision is required for an additional 17 pitches. I hope that that helps to define the concern.

Iain Wright: I apologise for taking up the Committee’s time, but this is an important point and I do not believe that the hon. Gentleman has addressed it. What additional benefits are we providing to a particular group of people in the clause, at the expense of other parts of the population? I suggest that we are not.

Grant Shapps: The Minister will note that I did not table an amendment to the clause, but I thought it right to highlight concerns in the debate. The concern is that providing a protected site effectively provides a benefit to one section of the community that does not exist for others, in this case the ability to obtain land for a specific purpose that does not exist if one does not happen to be part of that group. I am querying that principle, and I am surprised to hear the Minister argue against my point, as I understand—perhaps he will clear this up—that the Government included the clause as the result of the loss of a European case, which they argued against.

Andrew George: I was intrigued by the hon. Gentleman’s comment that the clause will provide benefits for one particular ethnic group. I agree with the Minister’s intervention. I do not believe that the provision or protection of sites to those within the travelling community group who may not otherwise have anywhere to reside is any additional benefit above and beyond that provided to the housed population. It merely provides something to ensure that they have some measure of protection in our society, which is not unreasonable. I shall not stray into mentioning dog whistles and so on, but it is important that we take a balanced approach.
Not having anticipated the contribution of the hon. Member for Welwyn Hatfield, my purpose in rising was to seek the Minister’s advice on the purpose of the clause. Notwithstanding your advice on new clause 15, Mr. Gale, which was not signed by other members of the Committee and therefore will not be debated, I ask the Minister whether there is provision, or an intention to amend the clause, to address concerns in parts of the country where there are substantial mobile home sites. I am sure that the Minister understands that those sites are seen by some as a lifestyle choice, based on the ambience and lifestyle of the mobile home park. Because of the shortage of housing provided by social housing providers, registered social landlords and others, mobile home parks have become an alternative; for some, it is the only route to meet their housing needs.
I appreciate that, over the past 10 or 11 years, the Government have addressed the issue, in so far as they have consulted that sector and the residents living in mobile home parks and have brought forward regulations to provide them with a modicum of protection from some mobile home park owners. However, in my experience of mobile home parks in my constituency, the attitudes of the park owners are in some cases rather draconian, and they are certainly not transparent in the way in which they divvy up the energy bills and charges for those who come in and out of the park sites. For those and other reasons, concern has been expressed about the management of those parks.
For those who fall off the radar screen for the provision of social housing and who live in mobile home parks because they have no alternative—they do not do so out of choice—I seek the Minister’s advice. Do the Government ultimately intend to bring in regulations on mobile home parks to put them under the regulator Oftenant? As drafted, the Bill does not allow for that.
The Bill allows the Secretary of State to make provisions to extend its scope in regulation. I therefore ask the Minister whether, if the purpose of the Bill is to provide protection in society with regard to the quality of the accommodation where people reside, he believes that they should be given some assistance and should not be left outside the provisions of the Bill. I look forward to hearing the Minister’s comments.

Andrew Slaughter: The provision has been a long time coming, and the Opposition are right to say that it was prompted by a decision of the European Court of Human Rights. The Minister will doubtless correct me if I am wrong, but the Government have willingly introduced the proposal. I am pleased that they have done so, and I hope that the Minister is, too.
It is a significant measure, because it applies security of tenure to people living on local authority Gypsy and Traveller sites, who do not currently have that protection. That creates an intolerable situation, as people can be evicted from the site with 28 days’ notice, as if they were unprotected tenants. That is notwithstanding all the other problems often associated with the level of accommodation provided on such sites. For example, there are usually long-term residents on a site near my constituency. They may be in caravans or mobile homes, many of which are permanent dwellings in which whole families have grown up. That is the comparison with other forms of social housing, and I shall turn in a moment to the point raised by the hon. Member for St. Ives.
I had hoped that the proposal would be uncontroversial. I stand to be corrected, but I thought that it had all-party support. I am member of the all-party Gypsy and Traveller law reform group. That group, ably advised by the Traveller Law Reform Project, has campaigned strongly on the provision and welcomes its inclusion—I think that my hon. Friend the Minister is meeting the group tomorrow morning. If the clause is accepted, as I hope that it will be this afternoon, I am sure that he will be congratulated. It is therefore with some concern that I have seen the official Opposition raising unsustainable objections to it.

Grant Shapps: I am concerned that the hon. Gentleman is concerned that I am raising concerns, which is the entire point of the Committee. The idea is to analyse each line of the Bill. We did not table amendments, but none the less we want some clarification. Will the hon. Gentleman accept that even though the Government have included the clause, it was done as a result of a European case, which the Government fought in court?

Andrew Slaughter: I have gone over that ground and said that that may well have been the prompt. However, I have also said that I think the provision long overdue. The Minister can speak for himself, but I see it as something that the Government are bringing forward positively rather than, as the hon. Gentleman has put it, a problem. I do not think it a problem for the Government, although it may be a problem for the Opposition. There is still a considerable amount of discrimination against Gypsies and Travellers in this country, of a type which would be unheard of in relation to other ethnic groups.
The Minister has explained that the clause simply puts people who are for the main part in established homes in the same position as many other people in the public and private sector in this country. The hon. Gentleman has said that I should not be concerned, but I am concerned that Conservative Members can hold such an antediluvian view in the 21stcentury. However, that is a matter for them, and they must stand by it—it may go down well in Welwyn Hatfield, but it does not go down very well in Shepherd’s Bush.
It may be more appropriate to raise another matter of continuing concern on clause 67. If we have not reached that clause by this afternoon, which does not look likely now, we can perhaps raise with the Minister on Thursday the question whether local authority and RSL Gypsy and Traveller sites should be considered as social housing and come within the ambit of other parts of the Bill. There is a strong case for that, but this is probably not the time to discuss it.

Iain Wright: When the hon. Member for St. Ives discussed new clause 15, which was not moved, you were incredibly generous, Mr. Gale, so I hope that you will allow me a moment or two to clarify the position. I am intrigued by the new clause, which has a lot of merit, and I am keen to help. I am also keen that the reforms that we made to the park home sector a year or two ago need to bed down, as I mentioned to the all-party group. In terms of licensing and a “fit and proper person” there is merit in what the new clause suggests.
I am not minded, given the current wording, to accept anything along those lines on Report, but I am keen to look into the matter to ensure that park home owners feel reassured and that licensing in some form is something that we can consider. I am not willing to accept the precise definition in new clause 15, but I am keen to look at the matter and to work with the industry and other stakeholders to move forward. I hope that reassures the hon. Members for St. Ives and for North Devon (Nick Harvey).
Clause 272 has been mentioned several times. It is important to reaffirm that it gives greater security of tenure for Gypsies and Travellers living on local authority sites. It narrows the disparity between Gypsies and Travellers and the mainstream population, which has been a source of genuine grievance and community tension for quite some time. I am pleased to be able to try to reduce that community tension as much as possible.
The current situation has also been mentioned, and I want to put it on record. At present, a local authority seeking to gain possession of a pitch on its site is not required to do more than provide 28 days’ notice of termination of the resident’s licence, when it can seek a possession order from the court. The site resident cannot put up any defence against a claim for such an order. If the court is satisfied that the notice was properly served, it has no discretion and must grant the possession order, although, since the Housing Act 2004, it can suspend such an order for up to 12 months. On private Gypsy and Traveller sites and park home sites, the court can assess both sides of the case, and it may deny a possession order, if such an order is deemed unfair.
There is a disparity and my hon. Friend the Member for Ealing, Acton and Shepherd’s Bush is a member of the all-party group on Gypsy and Traveller law reform, which does an awful lot of good work in this area. I understand that the chair of the group is my hon. Friend the Member for Cardiff, North (Julie Morgan).

Andrew Slaughter: Yes. I mentioned that my hon. Friend the Member for Cardiff, North chairs the group, and indeed she brought forward the private Member’s Bill that received a favourable response from the Government and led to this clause.

Iain Wright: I am grateful to my hon. Friend for that. My hon. Friend the Member for Cardiff, North has played an important role in moving this debate forward. She has described the current situation—I think that I am quoting her correctly—as “grossly unfair”. My hon. Friends the Members for Ealing, Acton and Shepherd’s Bush and for Cardiff, North have worked hard to remove that disparity, which is what clause 272 aims to do.
It has been mentioned before, but the new right is part of the Government’s response to the ruling by the European Court of Human Rights in the case of Connors v. UK in 2004. I do not see that as a problem, as the hon. Member for Welwyn Hatfield has suggested, but it is worth setting out the scenario. The court found that the disparity between local authority Gypsy and Traveller tenants and tenants of private sites contravened article 8 of the European convention on human rights, which is the right to private, home and family life. The Government’s immediate response was to give the court the power to suspend a possession order in section 211 of the Housing Act 2004, but following consultation and the work of my hon. Friends the Members for Ealing, Acton and Shepherd’s Bush and for Cardiff, North, we considered that it would be right to go further than that. By removing the exclusion of Gypsies and Travellers living on local authority sites in the Mobile Homes Act 1983, clause 272 will ensure that the due process afforded to other members of society in similar housing is given to Gypsies and Travellers. They, too, will have the opportunity to set out their case.
I am intrigued by the manner in which the debate on clause stand part developed with regard to this area, because I stress the point that clause 272 is basically providing due process that is provided to other members of society. It is not providing anything special—it is just raising the game and removing that disparity. I agree with my hon. Friend the Member for Ealing, Acton and Shepherd’s Bush that that is not particularly controversial. It is just trying to remove some sort of disparity. The court will need to take a view on the following matters: first, whether a site resident has breached the terms of their agreement by, for example, engaging in antisocial behaviour; secondly, whether they have been given a reasonable opportunity to remedy that breach and have failed to do so; and finally, whether granting a possession order is reasonable.
I have already mentioned the manner in which this debate has developed, and I really want to stress that the clause will not give residents of local authority Gypsy and Traveller sites any special rights—it will simply give them the same rights as other people living in caravans and mobile homes. It will not prevent site residents who break the conditions of their agreements from being evicted. In fact, it should become easier for local authorities to identify individuals or families who have behaved unreasonably on sites in the past and to make informed decisions on whether to give them a pitch. It will not give security of tenure to anyone on an unauthorised encampment or development.
An important piece of work has been carried out by the independent task group on site provision and enforcement, which was chaired by Sir Brian Briscoe, the former chief executive of the Local Government Association. The group noted the importance of changing the law in this way. The final report from this group was published last month, and it stated:
“The current situation is unacceptable. We would expect local authorities too to welcome the clarification of the expectations upon them as landlords that legislative change would bring.”
The Bill will decrease the number of legal actions in the courts by creating a clear and structured framework for local authorities to adhere to in the eviction process, which will prevent them from opening themselves up to allegations of unfair eviction and therefore reduce the expense of fighting such cases.
The clause will not change the law governing private Gypsy and Traveller sites, or other sites already covered by the Mobile Homes Act 1983, such as park home sites. It is not particularly controversial, although some of the letters that I receive, mostly from Opposition Members who pass on letters from the public, tend to support the view of my hon. Friend the Member for Ealing, Acton and Shepherd’s Bush that that is the last bastion of established racism, which should not be accepted in a modern, tolerant society. There should be a political consensus that every group has rights and responsibilities, and it is offensive to single out groups and particular characteristics.

Grant Shapps: I hope the Minister will accept that it is absolutely right to debate a clause such as this. He has gone a long way in satisfying some of our concerns, for which I am grateful. The Government must have had concerns about the measure, because the case of Connors v. the UK came to court in 2004. I hope, too, that the Minister respects our right to raise the issue and to have a sensible discussion about it. I am grateful for the clarification that he has given, and I ask him to acknowledge that it is perfectly right to discuss these things.

Iain Wright: I hope that the hon. Gentleman agrees with me that there is a need for political consensus on the issue. Racism and bigotry should not be tolerated in any form. My sense is that in general the public are wise to it and think it offensive to refer to people in racist terms. However, there is a narrow element who seem to consider that Gypsies and Travellers are exempt from such considerations. We need a consensus in the House to ensure that that sort of thing is not tolerated and to stamp down on it.
With the greatest respect to the hon. Gentleman, as I have not received a letter on the subject from him, Conservative Members need to be firmer in smacking down people who send racist letters about Gypsies and Travellers. We need to avoid the negative feeling that persists out there. Despite that, the clause is relatively uncontroversial.

Question put and agreed to.

Clause 272 ordered to stand part of the Bill.

Andrew Love: On a point of order, Mr. Gale. You look rather surprised, but I crave your indulgence. I may have a point of information, not a point of order, but it is important to the Committee. As I was returning to the Room, I noticed with some concern that people in the Public Gallery cannot not hear the debate properly—it is partly because of the lay-out of the Room and partly because there is no amplification. Failing an alternative, will you ask hon. Members to speak a little louder when they contribute to the debate?

Roger Gale: Order. A Member’s projection is for the individual Member; it is a sad fact of life that not every Member of the House has had professional theatrical training.

Andrew Love: It should be compulsory.

Roger Gale: Order. I accept that the acoustics in this Room are frightful, but they always have been and probably always will be. The hon. Gentleman may be interested to know that we have taken note of those concerns. The Doorkeeper has indicated that anybody in the Public Gallery who is particularly hard of hearing might be able to sit in the Press Gallery, which is slightly closer to mumbling Members. I hope that that resolves matters; let us now get back to the business of the Committee.

Clause 273

Financial assistance for certain services about commonhold

Amendments made: No. 119, in clause 273, page 115, line 25, leave out ‘Section 62’ and insert ‘In section 62(1)’.
No. 120, in clause 273, page 115, line 27, leave out from ‘matters)’ to end of line 28.
No. 121, in clause 273, page 115, line 29, leave out ‘and’.
No. 122, in clause 273, page 115, line 31, leave out from ‘with’ to end of line 36 and insert ‘—
(a) any”, and
(c) after “matters” insert “, or
(b) any other matter relating to commonhold land and residential matters”.
( ) In the heading of section 62 of that Act after “advice” insert “etc.”.’.—[Mr. Wright.]

Clause 273, as amended, ordered to stand part of the Bill.

New Clause 23

Right to acquire freehold: abolition of low rent test
‘(1) In section 1(1) of the Leasehold Reform Act 1967 (c. 88) (right to enfranchisement or extension of long leaseholds)—
(a) in paragraph (a) omit “at a low rent”,
(b) before “and” at the end of paragraph (a) insert—
“(aa) in the case of a right to acquire an extended lease, his long tenancy is a tenancy at a low rent;”, and
(c) in paragraph (b) after “he has” insert “—
(i) in the case of a right to acquire the freehold, been tenant of the house under a long tenancy for the last two years; and
(ii) in the case of a right to acquire an extended lease,”.
(2) In that Act—
(a) in section 1(1A) (excluded tenancies)—
(i) for “subsection (1)(a) and (b)” substitute “subsection (1)”, and
(ii) omit “at a low rent”, and
(b) omit—
(i) section 1A(2) (certain deemed low rent tenancies),
(ii) section 1AA (additional right to enfranchisement where tenancy not low rent tenancy), and
(iii) section 4A (alternative rent limits for purposes of section 1A(2)).’.—[Mr. Wright.]

Brought up, and read the First time.

Iain Wright: I beg to move, That the clause be read a Second time.

Roger Gale: With this it will be convenient to discuss the following Government amendments: Nos. 123, 125 to 128 and 131.

Iain Wright: I am very conscious that I could be a mumbling Member and Minister, so I shall do my best to ensure that Members can hear me.
New clause 23 removes the low-rent test as a means of deciding whether the right to enfranchise—the right to buy the freehold—arises. The test will remain for some purposes, such as determining the basis for valuing the freehold and cases in which the claim is for a lease extension as opposed to acquiring the freehold. The test will also continue to apply to existing leases. Under the Leasehold Reform Act 1967, long leaseholders have a right to enfranchise subject to meeting certain criteria, which include having a long lease at a low rent. A complex formula sets out the criteria for determining what precisely low rent is.
A series of amendments to the 1967 Act mean that the low-rent test has progressively been removed from determining eligibility for enfranchisement. However, the low-rent test has been retained for leases granted by registered social landlords, because other provisions, intended to allow such landlords enfranchisement—I am going to have problems saying that with my new teeth—in particular circumstances were not felt to be as effective as was intended. That issue has been addressed through other proposed amendments to this Bill. We are now proposing the removal of the low-rent test, which is no longer necessary as a consequence of those other changes.
Government amendments Nos. 123 and Nos. 125 to 128 are technical amendments consequent on new clauses 23 to 25. Government amendment No. 131 provides for new clauses 23 to 25 to come into force on a date to be appointed by the Secretary of State. I hope that I have clarified matters, despite the fact that I cannot say “enfranchisement” properly.

Andrew George: I would be grateful if the Minister were to clarify what exemptions there are. As I understand it, exemptions are available under the current leaseholder format. Certainly, some were negotiated for my constituents on the Isles of Scilly, who are also tenants of the Duchy of Cornwall. I believe that those exemptions have been extended to other privileged landlords. I would be grateful if he could inform the Committee whether the proposed alterations to the 1967 Act will change those exemptions. Tenants subject to those exemptions are not entitled to purchase or to take a pecuniary interest in the freehold of a particular property. Will those exemptions effectively be annulled as a result of the amendments and, in particular, new clause 23?

Iain Wright: I am grateful—I think—to the hon. Gentleman for raising that point. I am not aware of anything in particular, although there are concerns about possible effects on leaseholders in cathedral precincts, for example. However, I shall consider his specific concerns about the Isles of Scilly and write to him later, if that is okay.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 24

Shared ownership leases: protection for certain limited equity leases
‘In paragraph 3(2)(f) of Schedule 4A to the Leasehold Reform Act 1967 (c. 88) (exclusion from enfranchisement for certain shared ownership leases granted by housing associations: condition that lease provides for the tenant to acquire the landlord’s interest)—
(a) after “acquire” insert “all of”, and
(b) after “prescribed” insert “or provides for the tenant to acquire some of the landlord’s interest on terms specified in the lease and complying with such requirements as may be prescribed”.’.—[Mr. Wright.]

Brought up, and read the First time.

Iain Wright: I beg to move, That the clause be read a Second time.

Roger Gale: With this it will be convenient to discuss Government new clause 25—Shared ownership leases: protection for hard to replace houses.

Iain Wright: The amendments will help to ensure that shared ownership properties are retained for future purchases, where replacement would be difficult. It will give first-time buyers a chance to get on the housing ladder in those areas, while, at the same time, keeping properties as affordable housing for future purchasers.
The amendments have been tabled in response to concerns expressed to the Government by rural stakeholders, including the Campaign to Protect Rural England, the Affordable Rural Housing Commission and the Commission for Rural Communities. The proposed changes received widespread support in the responses to our consultation paper, “Shared Ownership and Leasehold Enfranchisement”—it is that word again—published in July 2007 by my Department.
Shared ownership, including properties offered under the Government’s new build homebuy scheme, provides a means of helping households to get on the housing ladder by initially buying a share in a property—on shared equity schemes, we have helped about 95,000 households to get on to that ladder since 1997. Purchasers pay rent to a provider, usually a housing association, on the remainder of that property. In general, the Government want shared owners to have the option to increase the size of their equity share over time and to move to full ownership, when they can afford to do so and where it is financially sustainable. That process is known as staircasing.
I am aware that in some areas—for example, small rural settlements—affordable housing is difficult to replace after a purchaser has bought it outright. In some circumstances, particularly in rural areas, land may not come forward for development if its owner cannot be assured that the housing built on it will remain affordable for future purchasers. Currently, a number of measures can be used to keep shared ownership housing affordable for future purchasers, including providers buying back properties, but, frankly, such schemes are inconsistent between landlords and are sometimes difficult to use or apply.
I therefore want to provide the flexibility to respond to specific, local housing need and, where necessary, to keep some shared-ownership housing affordable for future purchasers. That is in line with the wishes of landowners, providers and other rural interests. The changes that I am proposing will enable some areas to be designated as protected areas, where shared ownership housing cannot be lost to the open market but will remain affordable for future purchasers.

Nick Raynsford: I warmly welcome this new clause, and the commitment to ensure a provision for retaining shared ownership in areas of need. Yet this all depends, crucially, on the definition of the area. Will my hon. Friend say a little more about how widely he intends to set the parameters defining the protected areas? Will they cover all rural areas and other areas of intense housing need, where the loss of shared ownership housing through staircasing would reduce the availability of housing for people in need?

Iain Wright: My right hon. Friend has raised an extremely important point. My intention is that the areas will be small and will respond to specific local housing needs. Because of that, new clause 25 will do a range of things. It will amend existing legislation to enable the Secretary of State to make an order designating an area as one where limited land is available for the replacement of affordable housing; it will enable local authorities to designate specific sites within the area; and it will require all providers of affordable housing in those sites to keep that housing affordable in perpetuity. In response to my right hon. Friend’s specific point, those areas will be designated quite tightly.

Nick Raynsford: My hon. Friend has not entirely satisfied my concerns, because a tight definition would obviously mean that relatively limited numbers of areas would benefit. In many rural areas—and, indeed, in some urban areas—there is a real worry, where it is extremely difficult to meet housing needs because of high land values, that social housing provided through the shared ownership route will be lost through staircasing without appropriate safeguards.
I support strongly the general principle of staircasing, but in those areas of need, there is a strong case for protection. Is the Minister willing to encourage local authorities that believe that their areas are experiencing such need to make representations for their areas to be designated under this provision?

Iain Wright: My right hon. Friend has raised an interesting point with which I have a lot of sympathy. I think that the areas will be relatively small and will respond to specific acute housing demand. I intend to publish criteria with regard to designating protected areas and to consult stakeholders shortly. I think that this issue will be debated during that process, but I take on board my right hon. Friend’s important point.
Providers will be able to maintain affordability through either or both of the following mechanisms, which must be clearly stated in the lease. The first is restricting staircasing under the terms of the shared-ownership lease. Leases will need to state that the purchaser cannot enfranchise and state a maximum share that a purchaser could acquire. As I have suggested, this is an and/or situation. The second mechanism is ensuring that providers have the right to buy back properties and sell them on as affordable housing or nominate new buyers from waiting lists when they are sold. The shared ownership lease must detail that obligation. If the provider does not restrict staircasing, they will be required to exercise the right to buy back.
In response to the consultation that I referred to earlier, the National Housing Federation welcomed the move to clarify the position of leasehold enfranchisement rules in relation to shared ownership. The federation also believes that staircasing restrictions will encourage landowners in rural areas to discuss more openly the potential for affordable housing, if they can be reassured that the housing will remain affordable for future owners. The Commission for Rural Communities considers that restricting staircasing is a usable mechanism for retaining shared-ownership properties, and many local authorities have welcomed the changes, which will increase their ability to deliver and retain affordable housing in their areas.
New clause 24 will allow housing associations to grant shared-ownership leases that do not allow the purchaser to acquire 100 per cent. of the freehold. That will provide an additional mechanism in order to retain houses on a shared-ownership basis for future purchasers in a protected area, as proposed under new clause 25. That is an important rule that will help to maintain affordability.

Andrew George: Like the right hon. Member for Greenwich and Woolwich, I have some concerns. I welcome the general drift of the new clauses, but I am concerned whether the definition of landlords to whom the new clauses apply is sufficiently tightly or clearly drawn, so that the landlords who may be subject to a process of ownership of a property through staircasing rather than outright purchase are clear. It is clear in new clause 24 that that applies to housing associations. I just want to be clear that the drafting of the new clause does not open up other tenants of properties equally to staircasing and, through the back door, obtaining properties that we all hope will be recycled within the local community to meet a local need in perpetuity.
When the right hon. Member for Greenwich and Woolwich intervened on the definition of the areas, the Minister responded that the Secretary of State will define those areas tightly by order, which concerns me on two fronts. We have been told that the Secretary of State will take the decision. I seek reassurance that local authorities will have a mechanism by which they can draw the boundaries, rather than it being left to local authorities to apply to the Secretary of State for the definition of where the boundaries of the protected areas lie.
I hope that the Minister recognises that there is great advantage, particularly for housing associations in areas where there is a particular need for affordable housing, to apply a mechanism known in the trade as the golden share. In other words, the housing association will always retain the golden share, which would enable it to ensure that when a property is given up by the occupant, that property can be directed to meet the needs of someone who seeks local, affordable housing, rather than being lost and sold on the private market.
Where that cannot be restricted, I seek the reassurance of the belt-and-braces approach. If we cannot simply apply the golden share, we could have staircasing of shared ownership up to a certain agreed level—for instance the housing association could retain a 10 per cent. or 25 per cent. share that the occupant cannot purchase. Even where the golden share applies, I hope that the Minister will allow those housing associations to apply a legal covenant on the property, which would ensure that it would meet the need for local affordable housing in perpetuity. In circumstances where the property is subject to a section 106 agreement under a planning permission, I seek reassurance that the new clauses will not undermine the intent of those planning permissions, which themselves could be drafted in such a way, as happens in many circumstances, as to direct those properties towards specific social groups. Such properties are intended to meet a defined local need for affordable housing.
I seek reassurance, prompted in part by the intervention by the right hon. Member for Greenwich and Woolwich, that we are not slackening control over the scarce provision of affordable housing for local people. That is particularly true in rural areas, as the right hon. Gentleman has identified, but there are many other parts of the country where the need within the local community is particularly intense and where the provision of affordable local housing is scarce. I hope that the Minister will take those concerns on board.

Nick Raynsford: I want to echo some of the concerns voiced by the hon. Member for St. Ives and to repeat the points that I put to my hon. Friend in my interventions, as his responses gave me the impression that the Government are taking too minimalist a view of the application of powers. As I understand it, one of the two provisions relates specifically to housing association shared-ownership schemes, and the other relates to leasehold schemes for the elderly.
The first issue raised by the hon. Member for St. Ives is whether other shared-ownership schemes would benefit from being defined within the remit of the powers at a future date. That clearly cannot be done under the definition in the new clauses, but there may be a case, in the context of the Bill, for a more flexible framework to embrace private sector providers as well as registered social landlords. If private sector providers are providing shared ownership in areas of high value and high housing stress, it may be that the restrictions on staircasing should apply.
The second issue concerns the definition of areas. The current definition of rural areas embraces areas with fewer than 3,000 homes. That has generally been used as the criterion for defining rural areas. If the Minister had indicated that it would be used as the basic criterion for defining those areas where the restriction on staircasing will apply, I think that many of the anxieties that the hon. Member for St. Ives and I have voiced would have been satisfied as far as rural areas are concerned.
As the Minister knows, however, I have also voiced concerns about some urban areas. There are parts of central London—it is not only central London but inner London as well—where land values are incredibly high. If social housing is lost, it is virtually impossible to reprovision it. The high capital cost of investment makes that very difficult, if not impossible, and there may well be a case for applying the restriction in such circumstances.
The third issue that I want to highlight is encouragement for landowners to release land at less than market value to facilitate housing development. We have discussed this in Committee on previous occasions, and, as the Minister acknowledged in his introductory remarks, it is relevant to making land available in some rural communities, where landowners are reluctant to make provision if they think that the land will not be held in perpetuity for social housing needs.
If landowners are to be encouraged to make land available, it is essential that they should not have any grounds for fearing that land that they offer at less than market value could subsequently bring a windfall gain to the person who occupies the home that has been built on that land. The staircasing process could enable them to staircase up to outright ownership and then to sell on the open market. There is a serious need to encourage landowners to make land available at less than market value in areas of high stress, if that is crucial to the provision of affordable housing, but, unless we have a good, broad and generous interpretation of the areas where such restrictions will apply, the benefits that can be achieved will be less extensive and more limited than the Government would like, and certainly than I would like.
I urge the Minister in his response to accept that there should be a full consultation with interested parties before the areas covered by new clauses 24 and 25 are defined, and that the Secretary of State, when defining the areas, should be mindful to listen to the views of local authorities, housing associations and other housing providers, which are aware of the needs of those areas and of the importance of retaining an element of affordable and social housing.

Iain Wright: Several important points have been raised by the hon. Member for St. Ives and by my right hon. Friend the Member for Greenwich and Woolwich. I hope that I can address their concerns and reassure both of them.
If I interpreted correctly the concerns of the hon. Member for St. Ives—he can always intervene on me, if I have this wrong—I got the impression that he was concerned that there would be some sort of staircasing, or avoidance of staircasing, through the back door by non-social providers. I hope that I understood him correctly.

Andrew George: I am sorry if I did not make myself clear. I am concerned about how widely the new clause may be drawn or interpreted at present, and the extent to which it may be amendable in future and applied more widely. Certainly there is a concern that affordable properties that are intended to meet a local housing need may be lost because of the provision in the new clause. Is that unintentional?

Iain Wright: That is exactly what we want to avoid, and it is the point of the new clause. New clause 25 will apply to all providers in a protected area. I hope that that addresses the hon. Gentleman’s point about back-door staircasing and 100 per cent. ownership. I understand his concerns about a top-down approach from the Secretary of State providing an order. I hope that I can reassure—

It being One o’clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at Four o’clock.